UK Mortgage Approvals Climb to Highest Level Since November, Says BoE
Resilience in the UK Economy Amid Global Uncertainty
Mortgage Approvals Reach Four-Month High
LONDON, May 1 (Reuters) - British lenders approved the most mortgages in four months in March while consumer lending grew at the fastest annual rate in over two years, according to Bank of England data which showed some resilience in the economy at the start of the Iran war.
The number of mortgages approved for house purchase - a leading indicator for home sales - rose to 63,531 in March from 62,708 in February, the highest number since November and bucking economists' expectations in a Reuters poll for a fall.
Consumer Lending and Credit Growth
Friday's data also showed net unsecured lending to consumers rose by 1.895 billion pounds ($2.58 billion) in March, slightly less than in February but above economists' forecast of a 1.75 billion pound increase, and representing the fastest annual credit growth since January 2024 at 8.9%.
Impact of the Iran War on Consumer Confidence
A drop in consumer confidence since the start of the Iran war and the prospect of higher mortgage rates have caused property surveyors and mortgage lender Halifax to report falling prices and lower buyer demand in March.
House Price Trends and Market Outlook
But figures from Nationwide Building Society released earlier on Friday showed house prices continuing to rise modestly in April, increasing by 3.0% from the same month in 2025.
Expert Analysis on Mortgage Rates and House Prices
Rob Wood, chief UK economist at Pantheon Macroeconomics, questioned how long the trend would continue.
If the BoE raised borrowing costs as markets expect, the interest rate on a new two-year fixed-rate mortgage at 75% loan-to-value looked set to rise to 4.8% in the coming months, up from 4.5% now and 3.9% at the start of the year, he said.
"Accordingly, we look for house price inflation of just 1.0% in Q4 2026," Wood said.
Bank of England's Interest Rate Decisions
On Thursday, the BoE kept interest rates unchanged at 3.75%. Governor Andrew Bailey said there was a range of possible paths for interest rates, depending on how long the Strait of Hormuz remained closed, and that he would not push back against market expectations for two quarter-point rate rises this year.
Additional Information
($1 = 0.7352 pounds)
(Reporting by David MillikenEditing by William Schomberg)
